0:00:01.439,0:00:01.689
[Unofficial Transcript]
0:00:01.639,0:00:05.460
[Mr. Gowdy] The committee will come to order.
This is a hearing on waste, abuse, and mismanagement
0:00:05.460,0:00:11.019
of government health care. And again, on behalf
of the witnesses and other interested folks
0:00:11.019,0:00:15.299
here, thank you for your indulgence for all
of us as we had to go vote.
0:00:15.299,0:00:21.280
The Oversight Committee mission statement
is as follows: We exist to secure two fundamental
0:00:21.280,0:00:25.710
principles. First, Americans have a right
to know that the money Washington takes from
0:00:25.710,0:00:30.450
them is being well spent. And, second, Americans
deserve an efficient, effective government
0:00:30.450,0:00:31.940
that works for them.
0:00:31.940,0:00:36.350
Our duty on the Oversight and Government Reform
Committee is to protect these rights. Our
0:00:36.350,0:00:40.550
solemn responsibility is to hold government
accountable to taxpayers, because taxpayers
0:00:40.550,0:00:45.359
have a right to know what they get from their
government. We will work tirelessly in partnership
0:00:45.359,0:00:50.510
with citizen watchdogs to deliver the facts
to the American people and bring genuine reform
0:00:50.510,0:00:55.760
to the Federal bureaucracy. This is the mission
of Oversight and Government Reform.
0:00:55.760,0:01:02.760
I will now recognize myself and then the gentleman
from Illinois and the gentleman from Arizona
0:01:05.650,0:01:08.420
for opening statements.
0:01:08.420,0:01:14.740
Again, I want to thank our distinguished eclectic
group of witnesses for offering what I am
0:01:14.740,0:01:17.130
sure is going to be wonderful insight and
testimony.
0:01:17.130,0:01:23.960
Congress all too often deals in abstracts,
issuing directives with broad scope and limited
0:01:23.960,0:01:30.720
specificity. In other words, we pass big ideas
and then leave the details to unelected individuals
0:01:30.720,0:01:35.270
who sometimes escape the scrutiny that comes
with popular elections, thereby abdicating
0:01:35.270,0:01:37.780
our constitutional role.
0:01:37.780,0:01:42.360
However, this malady in the past has not been
limited to our lawmaking responsibility. It
0:01:42.360,0:01:48.110
has also extended into Congress' role to hold
agencies accountable for glaring inefficiencies.
0:01:48.110,0:01:53.680
Hopefully, we are beginning to recapture that
role and in doing so rein in an overextended
0:01:53.680,0:01:57.410
bureaucracy fraught with mismanagement and
abuse.
0:01:57.410,0:02:02.180
Here on the Oversight Committee, it is our
duty to ask fair questions and demand honest
0:02:02.180,0:02:06.460
answers, answers whose validity the American
people for too long have been conditioned
0:02:06.460,0:02:13.460
to doubt. At a time when the approval of Congress
is historically and empirically abysmal, this
0:02:13.860,0:02:18.390
committee has a unique opportunity to begin
the arduous process of reinspiring trust in
0:02:18.390,0:02:25.120
the institutions of government. That process
begins with rooting out areas of waste, nowhere
0:02:25.120,0:02:27.350
more prevalent than in government health care.
0:02:27.350,0:02:31.390
The American people expect government to be
responsible stewards of taxpayer dollars and
0:02:31.390,0:02:36.750
devoted practitioners of honest introspection.
However, in the areas of Medicare and Medicaid,
0:02:36.750,0:02:42.560
we have utterly failed in both regards. In
the past, oversight has followed a basic path:
0:02:42.560,0:02:48.790
We identify a broken program, seek to expose
the underlying cracks in its foundation, and
0:02:48.790,0:02:54.790
explore possible avenues to rectify the problems.
We ask, why? What are the root causes? And
0:02:54.790,0:03:00.060
what can be done to fix the problem? In this
case, however, many of those questions have
0:03:00.060,0:03:03.840
already been asked and answered, and yet nothing
has been accomplished.
0:03:03.840,0:03:10.840
Since 1990, GAO has identified both Medicare
and Medicaid as highrisk programs, highlighting
0:03:10.990,0:03:16.840
a path that is fiscally unsustainable over
the long term. The GAO also found pervasive
0:03:16.840,0:03:22.490
internal control deficiencies that put billions
of taxpayer dollars at risk of improper payments
0:03:22.490,0:03:28.709
for waste. From delaying the implementation
of headless accounting system to ignoring
0:03:28.709,0:03:34.650
GAO recommendations designed to address improper
payment vulnerabilities, CMS has repeatedly
0:03:34.650,0:03:40.270
failed to properly confront these financial
failures, a burden that falls not on the Federal
0:03:40.270,0:03:46.150
bureaucrats tasked with enacting these reforms
but on American taxpayers across the country.
0:03:46.150,0:03:52.110
Both Medicare and Medicaid are in desperate
need of fundamental wholesale systemic reform.
0:03:52.110,0:03:57.420
They serve as two principal drivers of our
crippling burden of debt at a time when economic
0:03:57.420,0:04:03.000
uncertainty threatens our Nation's fiscal
security. Something simply has to be done.
0:04:03.000,0:04:07.629
However, fullscale reform is not the purpose
of this hearing. We are seeking to identify
0:04:07.629,0:04:14.000
areas of inefficiency and determine why commonsense
recommendations calculated to decrease exorbitant
0:04:14.000,0:04:19.400
costs have continuously been ignored. Trust
must be earned, and addressing the mistakes
0:04:19.400,0:04:24.750
of the past is an important first step in
that process. The American people expect that
0:04:24.750,0:04:30.130
when money is spent, it is spent properly.
And when areas of mismanagement are discovered,
0:04:30.130,0:04:33.380
they are promptly and adequately corrected.
0:04:33.380,0:04:39.230
However, recent failures have left them frustrated,
frustrated at the persistent waste, frustrated
0:04:39.230,0:04:43.620
with the lack of remedy, consequence, and
accountability, frustrated by a problem that
0:04:43.620,0:04:47.660
is so illustrative of a broken wasteful Federal
bureaucracy.
0:04:47.660,0:04:53.250
Today, I hope we can begin the process of
addressing that frustration and begin to rebuild
0:04:53.250,0:04:56.350
citizens' trust in the institutions of government.
0:04:56.350,0:05:01.080
And with that, I would yield to the gentleman
from Illinois for his opening statement.
0:05:01.080,0:05:02.020
[Mr. Davis] Thank you, Mr. Chairman.
0:05:02.020,0:05:09.020
And I want to thank you first of all for holding
this hearing, which I consider to be vitally
0:05:10.770,0:05:11.430
important.
0:05:11.430,0:05:18.430
As a Chicago native, I have long focused on
the problems of the inner city poor and disabled.
0:05:18.520,0:05:25.270
The Seventh Congressional District in which
I live is the largest medical center district
0:05:25.270,0:05:32.270
in the country, with 21 hospitals, four medical
schools, and 104 community health centers.
0:05:34.300,0:05:40.040
Specifically in my district, the Affordable
Care Act, which I strongly supported, improved
0:05:40.040,0:05:47.040
health insurance coverage for 334,000 residents
and closed Medicare's prescription doughnut
0:05:48.139,0:05:55.139
hole for 76,000 seniors. Additionally, it
extended coverage to 52,000 uninsured residents
0:05:57.830,0:06:04.750
and has reduced the cost of uncompensated
care for hospitals and other health care providers
0:06:04.750,0:06:09.050
by $222 million annually.
0:06:09.050,0:06:16.050
At a time when 13 million older Americans
are considered economically insecure and our
0:06:16.120,0:06:21.840
constituents are grappling with unemployment
and the effects of the economic downturn,
0:06:21.840,0:06:28.840
I am at a loss when some in Congress are pushing
to reduce or eliminate basic health care services
0:06:30.790,0:06:33.060
for vulnerable Americans.
0:06:33.060,0:06:40.060
Make no mistake, the repeal of the Affordable
Care Act and deficit reduction proposals targeting
0:06:40.650,0:06:47.650
Medicare and Medicaid will equate to an assault
aimed at women, the sick, and the poor.
0:06:51.000,0:06:58.000
In 2009, over 365,000 Americans were on waiting
lists in 39 States to join the 3 million aged
0:07:00.810,0:07:07.810
and disabled individuals receiving longterm
care services in nursing homes and in home
0:07:07.930,0:07:09.820
health care settings.
0:07:09.820,0:07:16.320
I am concerned that today's hearing, reportedly
focused on waste, abuse, and mismanagement
0:07:16.320,0:07:23.320
in government health care is less about constructive
proposals to fight fraud and is more about
0:07:24.030,0:07:30.410
the House Republican leadership's campaign
to cut Medicare and Medicaid.
0:07:30.410,0:07:36.680
For the record, this is the fourth hearing
in a row in the House on this topic, with
0:07:36.680,0:07:43.680
three identical hearings held in recent weeks
by the Energy, and House Committee, the Committee
0:07:45.160,0:07:50.479
on Ways and Means, and finally the Committee
on Appropriations.
0:07:50.479,0:07:56.620
It is clear to this member that the Republican
leadership has given messages to rank and
0:07:56.620,0:08:03.620
file members for its campaign to slash Medicare
and Medicaid. Certainly targeting waste and
0:08:07.460,0:08:14.460
abuse in Medicare and in Medicaid is an important
and bipartisan effort. I note that in February,
0:08:15.169,0:08:21.539
a multiagency antifraud effort, coordinated
under the auspices of the administration's
0:08:21.539,0:08:28.539
Health Care Fraud Prevention and Enforcement
Action Team, known as HEAT, resulted in criminal
0:08:29.350,0:08:36.350
charges being brought against 111 individuals
who allegedly defrauded the Medicare program
0:08:37.560,0:08:44.560
out of $225 million through false billing
claims and kickback operations.
0:08:45.660,0:08:51.480
As a proud supporter of the Affordable Care
Act, which contained essential funding and
0:08:51.480,0:08:58.080
new tools for agencies to fight health care
fraud, I am especially pleased that the HEAT
0:08:58.080,0:09:02.820
initiative has recently expanded to Chicago.
0:09:02.820,0:09:07.980
Again, I thank the witnesses for joining us
today, and look forward to their testimony
0:09:07.980,0:09:12.770
and to this hearing. I yield back the balance
of my time.
0:09:12.770,0:09:13.709
[Mr. Gowdy] Thank you, Mr. Davis.
0:09:13.709,0:09:17.730
Members may have 7 days to submit opening
statements and extraneous material for the
0:09:17.730,0:09:18.080
record.
0:09:18.080,0:09:23.490
We will now welcome our first panel of witnesses.
It is my pleasure to introduce them from my
0:09:23.490,0:09:24.399
left to right.
0:09:24.399,0:09:28.589
Ms. Deborah Taylor is the chief financial
officer and the director of the Office of
0:09:28.589,0:09:32.740
Financial Management at the Centers for Medicare
and Medicaid Services.
0:09:32.740,0:09:39.740
Dr. Peter Budetti is deputy administrator
for program integrity and director of the
0:09:42.060,0:09:45.940
CMS Center for Program Integrity at the Centers
for Medicare and Medicaid Services.
0:09:45.940,0:09:51.940
Mr. Gerald Roy is deputy inspector general
for investigations in the Office of Inspector
0:09:51.940,0:09:57.060
General at the U.S. Department of Health and
Human Services.
0:09:57.060,0:10:01.130
And the Honorable Loretta Lynch is the United
States Attorney for the Eastern District of
0:10:01.130,0:10:01.810
New York.
0:10:01.810,0:10:08.810
[Mr. Gowdy] I will, as is customary, ask the
witnesses to rise and receive the oath, and
0:10:11.380,0:10:15.420
then we will hear from you.
0:10:15.420,0:10:18.850
Raise your right hand. Do you solemnly swear
or affirm that the testimony you are about
0:10:18.850,0:10:23.070
to give will be the truth, the whole truth,
and nothing but the truth?
0:10:23.070,0:10:28.640
May the record reflect that all the witnesses
answered in the affirmative.
0:10:28.640,0:10:29.050
Thank you.
0:10:29.050,0:10:36.050
And I am sure that you all are familiar with
this process. There should be three lights
0:10:36.140,0:10:43.140
that are reasonably visible to you. The yellow
light is kind of a slowdown light, and the
0:10:43.440,0:10:48.540
red light, particularly given the time, and
in fact, we have another panel, I would ask
0:10:48.540,0:10:51.640
you to adhere to that as closely as you can.
0:10:51.640,0:10:56.640
And starting with Ms. Taylor, we will have
5 minutes for opening statements. Your full
0:10:56.640,0:11:01.060
statement will be made part of the record.
So if you don't get to all of it, don't think
0:11:01.060,0:11:03.100
for one moment that it won't be read. It will
be.
0:11:03.100,0:11:06.910
So we will start with Ms. Taylor and then
work our way down the table.
0:11:06.910,0:11:13.089
[Ms. Taylor] Good afternoon, Chairman Gowdy,
Ranking Member Davis, and members of the subcommittee.
0:11:13.089,0:11:17.060
Thank you for the opportunity to discuss the
Center for Medicare and Medicaid Services'
0:11:17.060,0:11:20.220
efforts to prevent and recover improper payments.
0:11:20.220,0:11:25.680
CMS is committed to reducing waste and abuse
in the Medicare program, and ensuring that
0:11:25.680,0:11:30.550
our programs pay the right amount for the
right service to the right person in a timely
0:11:30.550,0:11:34.930
manner. It is important to remember that most
errors are not fraud.
0:11:34.930,0:11:40.019
These errors generally result from the following
situations: One, a provider fails to submit
0:11:40.019,0:11:46.350
any documentation or submits insufficient
documentation to support the services paid;
0:11:46.350,0:11:51.100
second, services provided are incorrectly
coded on the claim; and, third, documentation
0:11:51.100,0:11:57.310
submitted by the provider shows the services
were not reasonably necessary. CMS is committed
0:11:57.310,0:12:02.040
to reducing improper payments, and we have
developed many corrective actions to resolve
0:12:02.040,0:12:05.019
and eliminate these improper payments in the
future.
0:12:05.019,0:12:10.149
CMS has extensive prepayment edits and other
review activities to identify some improper
0:12:10.149,0:12:17.070
payments. However, with close to 5 million
claims being processed each day, CMS cannot
0:12:17.070,0:12:23.100
manually review every claim before it is paid,
so we must rely on other techniques.
0:12:23.100,0:12:28.410
One important tool in our efforts to recover
improper payments is the recovery audit program.
0:12:28.410,0:12:33.360
In this program, recovery auditors work to
identify overpayments and underpayments in
0:12:33.360,0:12:38.990
the Medicare program. Recovery auditors are
paid on a contingency fee basis, which means
0:12:38.990,0:12:43.450
they are paid based on a percentage of the
total amount of claims they correct.
0:12:43.450,0:12:49.430
The Medicare Modernization Act of 2003 required
that we establish a recovery audit demonstration
0:12:49.430,0:12:55.570
to pilot the potential usefulness of recovery
auditing in the Medicare fee for service program.
0:12:55.570,0:13:01.269
During the demonstration project, the recovery
auditors corrected over $1 billion in improper
0:13:01.269,0:13:08.269
payments, including returning and collecting
overpayments in the sum of $990 million.
0:13:08.779,0:13:15.269
Congress expanded the recovery audit program
in the Tax Relief and Health Care Act of 2006,
0:13:15.269,0:13:22.120
directing CMS to implement a national recovery
audit program by January 2010. We considered
0:13:22.120,0:13:26.959
the lessons learned from the demonstration
in establishing the national program. It was
0:13:26.959,0:13:33.010
important that we design a national program
around five key elements: Minimizing provider
0:13:33.010,0:13:39.310
burden, ensuring accuracy of the auditor's
determinations, establishing an efficient
0:13:39.310,0:13:45.120
and effective process, tracking and correcting
program vulnerabilities, and ensuring program
0:13:45.120,0:13:49.720
transparency. I would like to talk a little
bit about some of the specific actions we
0:13:49.720,0:13:50.820
took.
0:13:50.820,0:13:55.810
To address provider burden issues related
to voluminous requests for medical records,
0:13:55.810,0:14:01.110
we established limits to the number of medical
records an auditor could request from a provider
0:14:01.110,0:14:07.600
within a 45day time period. We also required
that every recovery auditor hire a physician
0:14:07.600,0:14:13.610
medical director. This gives physicians additional
assurance that the claim denial decisions
0:14:13.610,0:14:20.279
are accurate. To improve program transparency,
we created a recovery audit Web site. This
0:14:20.279,0:14:25.769
Web site contains valuable information to
providers about where errors are occurring
0:14:25.769,0:14:28.170
and the reason for those errors.
0:14:28.170,0:14:34.959
And, lastly, we wanted to address recovery
audit concerns around pervasive incentives
0:14:34.959,0:14:40.579
to overidentify improper payments. So now
we require that recovery auditors must refund
0:14:40.579,0:14:45.380
any contingency fee related to decisions overturned
on appeal.
0:14:45.380,0:14:50.649
Although the national program is relatively
new, we have already seen significant benefits
0:14:50.649,0:14:57.389
from it. To date, the program has collected
or corrected a total of $365 million in improper
0:14:57.389,0:15:04.389
payments. Of that, $313 million is related
to overpayments that have been collected.
0:15:04.490,0:15:09.450
Another benefit of the program is identifying
vulnerabilities where policy changes, system
0:15:09.450,0:15:14.209
changes, and provider education and outreach
are needed to prevent improper payments in
0:15:14.209,0:15:19.950
the future. We are taking aggressive actions
to address these vulnerabilities, and we have
0:15:19.950,0:15:25.389
done many systems changes to stop payments
from going out the door. I am confident that
0:15:25.389,0:15:30.839
the national recovery program and ongoing
corrective actions we have in place will continue
0:15:30.839,0:15:32.800
to reduce improper payments.
0:15:32.800,0:15:35.579
Thank you. And I look forward to any questions
you may have.
0:15:35.579,0:15:36.839
[Mr. Dowdy] I thank you.
0:15:36.839,0:15:37.820
Dr. Budetti.
0:15:37.820,0:15:43.160
[Dr. Budetti] Chairman Gowdy, Ranking Member
Davis, members of the subcommittee, thank
0:15:43.160,0:15:48.000
you for this opportunity to discuss our work
at the Centers of Medicare and Medicaid Services
0:15:48.000,0:15:54.220
to reduce fraud, waste, and abuse in our programs.
I am delighted to be here accompanied by my
0:15:54.220,0:16:00.110
colleague Deborah Taylor from the CMS, Deputy
Inspector General Roy, and U.S. Attorney Lynch,
0:16:00.110,0:16:04.930
who are very close colleagues in the fight
against fraud, waste, and abuse.
0:16:04.930,0:16:09.990
From the first day that I had the privilege
to take this job a little over a year ago,
0:16:09.990,0:16:15.260
I have been asked two questions: Why do we
let crooks into our programs? And why do we
0:16:15.260,0:16:19.600
keep paying them after they get into the program
when we think their claims are fraudulent?
0:16:19.600,0:16:24.540
I am pleased to tell you that with the new
authorities that have been provided in recent
0:16:24.540,0:16:29.820
laws and the commitment of this administration
to fight fraud in our programs, we will be
0:16:29.820,0:16:35.240
keeping the people who don't belong there
out of our programs, and we will be rejecting
0:16:35.240,0:16:41.860
fraudulent claims before they are paid. We
now have the flexibility to tailor our resources
0:16:41.860,0:16:47.660
to the most serious problems and to quickly
initiate activities that will be transformative
0:16:47.660,0:16:50.019
in bringing about the results that I mentioned.
0:16:50.019,0:16:56.820
Under the leadership of Secretary Sebelius,
Centers for Medicare and Medicaid Services
0:16:56.820,0:17:01.769
have taken several administrative steps to
better meet emerging needs and challenges
0:17:01.769,0:17:08.529
in fighting fraud and abuse. CMS consolidated
the Medicare and the Medicaid program integrity
0:17:08.529,0:17:15.509
groups under a unified Center for Program
Integrity, which I have the privilege to direct.
0:17:15.509,0:17:21.339
This allows us to pursue a more coordinated
and integrated set of program integrity activities
0:17:21.339,0:17:26.720
across both programs. This has served both
our program integrity activities well, this
0:17:26.720,0:17:32.070
reorganization, as well as our ability to
collaborate with our law enforcement colleagues
0:17:32.070,0:17:36.789
in the Office of Inspector General and the
Department of Justice.
0:17:36.789,0:17:42.029
The Affordable Care Act greatly enhanced this
organizational change by providing us with
0:17:42.029,0:17:49.029
the opportunity to jointly develop Medicare,
Medicaid, and CHIP policies on these new authorities.
0:17:49.239,0:17:55.639
Affordable Care Act provisions, such as enhanced
screening requirements apply across the programs,
0:17:55.639,0:18:01.609
and this ensures better consistency in CMS's
approach to fraud prevention.
0:18:01.609,0:18:07.149
Some might believe that an organizational
change is of questionable value, but I can
0:18:07.149,0:18:12.259
tell you that creating a Center for Program
Integrity that is on par with other major
0:18:12.259,0:18:17.109
operational units within the Centers for Medicare
and Medicaid Services sends a powerful message
0:18:17.109,0:18:23.769
about our serious commitment to fighting fraud
and also puts the bad actors on notice.
0:18:23.769,0:18:28.600
We have made sure that our sights are fixed
on the goals that we want to accomplish, and
0:18:28.600,0:18:35.600
I would draw your attention to the chart that
illustrates our new approach that we are pursuing.
0:18:37.580,0:18:43.889
Number one, we are embarking on a number of
changes that will allow us to move beyond
0:18:43.889,0:18:49.320
our traditional way of fighting fraud, which
is known as pay and chase, to prevent problems
0:18:49.320,0:18:54.059
in the first place and to avoid them from
occurring.
0:18:54.059,0:18:58.779
Second, we will not take a monolithic approach
to dealing with fraud. We are focusing on
0:18:58.779,0:19:02.379
the bad actors who pose an elevated risk of
fraud.
0:19:02.379,0:19:08.039
Third, we are taking advantage of innovation
and sophisticated new technology as we focus
0:19:08.039,0:19:09.509
on prevention.
0:19:09.509,0:19:16.320
Fourth, consistent with this administration's
commitment to being transparent and accountable,
0:19:16.320,0:19:20.769
we are developing performance measures that
will specify our targets for improvement.
0:19:20.769,0:19:25.659
Five, we are actively engaging public and
private partners because there is much to
0:19:25.659,0:19:30.299
learn from others who are engaged in the same
endeavor of fighting fraud in health care
0:19:30.299,0:19:30.989
programs.
0:19:30.989,0:19:37.049
And, sixth, we are committed to coordination
and integration among all of the CMS programs,
0:19:37.049,0:19:41.249
drawing on best practices and lessons learned.
0:19:41.249,0:19:45.609
We are concentrating our actions so that we
are doing a better job of preventing bad actors
0:19:45.609,0:19:51.549
from enrolling in the first place, avoiding
fraudulent or other improper payments, and
0:19:51.549,0:19:57.049
working to achieve the President's goal of
cutting the error rate in Medicare parts A
0:19:57.049,0:20:03.590
and B by 50 percent by 2012. We are taking
advantage of today's cuttingedge tools and
0:20:03.590,0:20:10.179
technologies to help us at the front end and
throughout the implementation of our programs.
0:20:10.179,0:20:15.119
In doing this, one point bears stressing.
We are mindful of the necessity to be fair
0:20:15.119,0:20:20.049
to health care providers and suppliers who
are our partners in caring for beneficiaries,
0:20:20.049,0:20:25.840
and to protect beneficiary access to necessary
health care services. We will always respect
0:20:25.840,0:20:30.159
the fact that the vast majority of health
care providers are honest people who provide
0:20:30.159,0:20:36.139
critical health care services to millions
of CMS beneficiaries every day.
0:20:36.139,0:20:40.429
Mr. Chairman, I welcome this opportunity to
appear before the subcommittee, and I look
0:20:40.429,0:20:42.049
forward to your questions. Thank you very
much.
0:20:42.049,0:20:43.590
[Mr. Gowdy] Thank you, Doctor.
0:20:43.590,0:20:43.909
Mr. Roy.
0:20:43.909,0:20:50.129
[Mr. Roy] Good afternoon, Chairman Gowdy,
Ranking Member Davis, and distinguished members
0:20:50.129,0:20:54.590
of the subcommittee. I am Gerald Roy, Deputy
Inspector General for Investigations at the
0:20:54.590,0:20:59.190
U.S. Department of Health and Human Services
Office of Inspector General. Thank you for
0:20:59.190,0:21:03.330
the opportunity to discuss fraud within the
Medicare and Medicaid programs.
0:21:03.330,0:21:08.979
OIG is committed to protecting the integrity
of more than 300 programs administered by
0:21:08.979,0:21:14.470
HHS. The Office of Investigations employs
over 450 highly skilled special agents who
0:21:14.470,0:21:20.190
utilize stateoftheart investigative technologies
and a wide range of law enforcement actions.
0:21:20.190,0:21:24.479
We are the Nation's premier health care fraud
law enforcement agency.
0:21:24.479,0:21:30.559
Over the past 16 years, I have served in every
capacity from field agent to the special agent
0:21:30.559,0:21:36.470
in charge of the Los Angeles region to agency
head. It is from this perspective that I will
0:21:36.470,0:21:39.460
share my observations and experiences.
0:21:39.460,0:21:44.960
As a new OIG agent in 1996, I investigated
a case that took me from Southern California
0:21:44.960,0:21:49.340
to Miami. I gathered evidence on a father
and daughter team that had worked for several
0:21:49.340,0:21:56.340
years to steal almost $1 million. The investigation
and the prosecution took more than 3 years.
0:21:57.019,0:22:01.509
The father, a former drug dealer, told us
he found stealing from Medicare far safer
0:22:01.509,0:22:03.899
and more lucrative than trafficking.
0:22:03.899,0:22:09.200
Their scheme was simple. They used handwritten
lists of beneficiary numbers to submit paper
0:22:09.200,0:22:14.649
claims for durable medical equipment they
never provided. Both ultimately pled guilty
0:22:14.649,0:22:17.629
to health care fraud and conspiracy charges.
0:22:17.629,0:22:24.440
Sixteen years later, I see this same general
scheme on a grander, more sophisticated scale.
0:22:24.440,0:22:31.440
Today, such schemes go viral. That is, they
replicate, spread quickly, with national implications.
0:22:32.759,0:22:37.659
Perhaps the most challenging and disturbing
trend is the infiltration of Medicare by sophisticated
0:22:37.659,0:22:42.830
organized criminal networks and violent criminals,
who have little fear of law enforcement and
0:22:42.830,0:22:45.820
view prison time as a badge of honor.
0:22:45.820,0:22:51.349
In Los Angeles, Eurasian organized criminals
rely on stolen physician identities and compromised
0:22:51.349,0:22:58.349
beneficiary numbers to perpetrate fraud. In
2003, we had nearly 2,500 compromised beneficiary
0:22:59.070,0:23:05.869
numbers shared electronically around Southern
California. By 2007, that number was well
0:23:05.869,0:23:08.970
in excess of 100,000.
0:23:08.970,0:23:13.509
With these compromised numbers, criminals
can steal well over $1 million in 90 days
0:23:13.509,0:23:19.759
without ever filing a single sheet or paper
or providing a single service. In one case,
0:23:19.759,0:23:23.440
they had ties to employees at a Medicare provider
enrollment.
0:23:23.440,0:23:29.330
These pictures you see here show weapons seized
during a health care fraud search warrant.
0:23:29.330,0:23:35.869
When I joined OIG, this criminal element and
their tactics were unheard of. Throughout
0:23:35.869,0:23:41.940
my tenure at OIG, major corporations and institutions
have committed health care fraud on a grand
0:23:41.940,0:23:42.330
scale.
0:23:42.330,0:23:48.570
Today, what is most troubling is the possibility
that some unethical health care corporations
0:23:48.570,0:23:54.080
build civil fines and penalties into their
cost of doing business. They may believe they
0:23:54.080,0:24:00.710
are too big to be fired, as to do so may compromise
the welfare of our beneficiaries. As long
0:24:00.710,0:24:07.710
as the profit from fraud outweighs punitive
costs, abusive behavior is likely to continue.
0:24:07.759,0:24:13.899
Built on trust, Medicare has allowed enrollment
of any willing provider and fraud perpetrators
0:24:13.899,0:24:20.259
have exploited this. OIG has long advocated
strengthening enrollment standards, making
0:24:20.259,0:24:24.549
participation a privilege, not a right.
0:24:24.549,0:24:29.249
Also, those who steal from Medicare often
perceive a low risk of detection and minimal
0:24:29.249,0:24:35.369
penalties compared to streetlevel crimes.
However, reinvigorated partnerships and an
0:24:35.369,0:24:42.249
emphasis on this issue by our stakeholders,
including DOJ and CMS, reinforce my belief
0:24:42.249,0:24:47.580
that a sustained effort will make significant
strides toward eradicating fraud. Together,
0:24:47.580,0:24:52.729
we are utilizing new techniques to combat
fraud. We now catch criminals in the act,
0:24:52.729,0:24:58.109
conduct investigations and prosecute offenders
in a fraction of the time.
0:24:58.109,0:25:03.590
At OIG, we protect the Nation's most vulnerable
citizens and the Federal health care programs
0:25:03.590,0:25:10.309
they depend on. OIG special agents diligently
and effectively investigated health care fraud
0:25:10.309,0:25:15.739
long before this issue hit the national spotlight.
We will be here for the American taxpayers,
0:25:15.739,0:25:18.239
even if that spotlight fades.
0:25:18.239,0:25:24.210
However, from my perspective, we cannot afford
to let up. Sustained efforts and continued
0:25:24.210,0:25:31.210
interest by law enforcement, prosecutors,
CMS, Capitol Hill, and the American taxpayers
0:25:31.210,0:25:33.580
is paramount to our future success.
0:25:33.580,0:25:33.889
Thank you.
0:25:33.889,0:25:36.340
[Mr. Gowdy] Thank you, Mr. Roy.
0:25:36.340,0:25:39.469
We will now recognize Madam United States
Attorney, Ms. Lynch.
0:25:39.469,0:25:41.070
[Ms. Lynch] Thank you.
0:25:41.070,0:25:45.450
And good afternoon, Chairman Gowdy, Ranking
Member Davis, and distinguished members of
0:25:45.450,0:25:46.849
the subcommittee.
0:25:46.849,0:25:50.570
Thank you for inviting me to speak with you
today about the Department of Justice efforts
0:25:50.570,0:25:55.169
to combat health care fraud. I am honored
to appear before you on behalf of the Department
0:25:55.169,0:26:00.249
of Justice along with my colleagues from HHS,
OIG, and CMS.
0:26:00.249,0:26:04.869
As you know, the United States Attorneys and
their Assistant U.S. Attorneys are the principle
0:26:04.869,0:26:10.269
prosecutors of Federal crimes, including health
care fraud. We represent the Department of
0:26:10.269,0:26:15.109
Justice and the interests of the American
taxpayer in both criminal and civil cases
0:26:15.109,0:26:19.779
in the Federal courts in the 94 judicial districts
across the country.
0:26:19.779,0:26:24.450
The Department's civil attorneys, both in
the U.S. Attorneys Offices and the Department's
0:26:24.450,0:26:29.769
Civil Division, aggressively pursue civil
enforcement actions to root out fraud and
0:26:29.769,0:26:33.399
recover funds stolen in health care fraud
schemes.
0:26:33.399,0:26:38.679
Since the year 2000, the U.S. Attorneys Offices
working with our civil division colleagues,
0:26:38.679,0:26:45.429
as well as with the FBI, HHS, OIG, and other
Federal, State, and local law enforcement
0:26:45.429,0:26:51.239
agencies, have recovered over $1 billion every
year on behalf of defrauded Federal health
0:26:51.239,0:26:58.239
care programs. And in fiscal year 2010, the
Department secured approximately $2.5 billion
0:26:58.639,0:27:04.149
in civil health care fraud recoveries, more
than in any other previous year.
0:27:04.149,0:27:07.989
Working with our colleagues in the Criminal
Division, our criminal health care fraud efforts
0:27:07.989,0:27:14.259
have also been a tremendous success. In fiscal
year 2010, this departmentwide coordination
0:27:14.259,0:27:19.269
led to the largest number of criminal health
care fraud convictions since the inception
0:27:19.269,0:27:25.359
of the HCFAC program. Today, our criminal
enforcement efforts are at an alltime high.
0:27:25.359,0:27:30.609
In fiscal year 2010, the Department brought
criminal charges against 931 defendants and
0:27:30.609,0:27:36.479
secured 726 criminal health care fraud convictions.
0:27:36.479,0:27:41.549
The Medicare Fraud Strike Force is a supplement
to the Department's successful criminal health
0:27:41.549,0:27:46.359
care fraud enforcement efforts and is currently
operating in nine districts, including my
0:27:46.359,0:27:52.570
own district of Brooklyn. Each district has
allocated several AUSAs and support personnel
0:27:52.570,0:27:56.940
to this important initiative, and partners
with the Criminal Division attorneys as well
0:27:56.940,0:28:02.099
as with agents from the FBI, HHS, and State
law enforcement.
0:28:02.099,0:28:07.869
The strike force teams use data analysis techniques
to identify aberrational billing patterns
0:28:07.869,0:28:14.460
in strike force cities, permitting law enforcement
to target emerging or migrating schemes, along
0:28:14.460,0:28:20.269
with chronic fraud by criminals operating
as health care providers or suppliers.
0:28:20.269,0:28:26.440
This model is working. The strike force initiative
has been an unqualified success. In fiscal
0:28:26.440,0:28:33.419
year 2010, the strike forces secured 240 convictions,
more than in any other year of strike force
0:28:33.419,0:28:33.979
operations.
0:28:33.979,0:28:40.749
EDNY strike force criminal prosecutions cover
a variety of health care fraud schemes, including
0:28:40.749,0:28:45.979
kickbacks to patients. The principle focus
of the Medicare Fraud Strike Force in Brooklyn
0:28:45.979,0:28:51.700
has been to shut down medical clinics that
pay cash kickbacks to dual Medicare and Medicaid
0:28:51.700,0:28:56.960
beneficiaries to lure these beneficiaries
to the clinics through the illegal use of
0:28:56.960,0:29:03.599
transportation services reimbursed by Medicaid
and then illegally bill Medicare for services
0:29:03.599,0:29:09.200
either medically unnecessary or never provided.
I have included three of those major cases
0:29:09.200,0:29:11.830
in my written testimony.
0:29:11.830,0:29:17.279
Coordination of our health care fraud enforcement
resources works. AUSAs and the U.S. Attorneys
0:29:17.279,0:29:22.879
Offices, trial attorneys in the Civil and
Criminal Divisions, FBI and HHS agents, as
0:29:22.879,0:29:27.119
well as other Federal, State, and local law
enforcement partners are working together
0:29:27.119,0:29:29.929
across the country with great success.
0:29:29.929,0:29:35.139
Since the HCFAC program was established, working
together, the two departments have returned
0:29:35.139,0:29:42.129
over $18 billion to the Medicare trust fund.
Over the life of the HCFAC program, the average
0:29:42.129,0:29:49.129
return on investment, or ROI, has been $4.90
for every dollar expended. Very good. But
0:29:49.749,0:29:55.909
through our enhanced efforts over the past
3 years, the average ROI has been even higher.
0:29:55.909,0:30:01.979
As reported in the HCFAC program's annual
report for fiscal year 2010, the average ROI
0:30:01.979,0:30:08.979
for 2008 through 2010 was actually $6.80 for
every dollar expended, nearly $2 higher than
0:30:10.029,0:30:11.489
the historical average.
0:30:11.489,0:30:15.789
We are poised to continue these successes
in the months and years ahead, and we look
0:30:15.789,0:30:19.940
forward to working with our Federal, State,
and local partners to that end.
0:30:19.940,0:30:23.809
Mr. Chairman, thank you for this opportunity
to provide this overview of the Department's
0:30:23.809,0:30:25.739
health care fraud enforcement efforts.
0:30:25.739,0:30:28.179
[Mr. Dowdy] Thank you, ma'am.
0:30:28.179,0:30:34.629
I would at this point recognize the distinguished
gentleman from Illinois, Mr. Davis, for 5
0:30:34.629,0:30:36.649
minutes of questions.
0:30:36.649,0:30:40.080
[Mr. Davis] Thank you very much, Mr. Chairman.
0:30:40.080,0:30:45.080
And I want to thank each of the witnesses
for their testimony.
0:30:45.080,0:30:52.080
Dr. Budetti, it seems to me that since the
organization of CMS, that one of its primary
0:30:54.279,0:31:00.359
focuses has been on cost containment, that
there has been much conversation over an extended
0:31:00.359,0:31:07.359
period of time about reducing the cost of
health care and containing the cost. It has
0:31:11.109,0:31:18.109
been difficult to do. What would you consider
to be the primary elements of fraud in the
0:31:23.690,0:31:26.909
Medicare, Medicaid programs?
0:31:26.909,0:31:31.159
Dr. Budetti. Thank you, Mr. Davis.
0:31:31.159,0:31:38.159
I think, as Mr. Roy alluded to, we have seen
the evolution of a new generation of fraudsters
0:31:40.029,0:31:47.029
in these programs. We have had problems with
major health care entities, companies and
0:31:51.789,0:31:57.190
delivery systems and so forth for many years,
of course, but more recently what we have
0:31:57.190,0:32:02.639
seen is the criminal element coming into the
programs and taking advantage of the fact
0:32:02.639,0:32:09.019
that Medicare and Medicaid really were open
for providers and suppliers to join in order
0:32:09.019,0:32:13.450
to take care of our beneficiaries as necessary.
So we have seen a shift.
0:32:13.450,0:32:18.719
And I think that that is a very troubling
but important thing for us to recognize that
0:32:18.719,0:32:23.049
now we are not just dealing with the kinds
of problems that we faced in the past where
0:32:23.049,0:32:26.499
somebody is going to be in business a few
years down the road and we have a few years
0:32:26.499,0:32:31.759
to track after them and audit them and try
to recover or prosecute them, but where there
0:32:31.759,0:32:36.779
are criminals who are going to disappear very
quickly. So we need to be able to deal with
0:32:36.779,0:32:42.869
both kinds of fraud these days and be nimble
and stay ahead of the ones who just don't
0:32:42.869,0:32:44.070
belong in the programs at all.
0:32:44.070,0:32:51.070
[Mr. Davis] Are there loopholes in our system
that not only attract but kind of give individuals
0:32:57.179,0:33:02.019
the idea that there are ways to defraud the
system?
0:33:02.019,0:33:08.809
Dr. Budetti. Well, I think one of the loopholes
was not a loophole, but it was a deliberate
0:33:08.809,0:33:13.749
part of the program which, as I mentioned,
was a relative ease of getting providers and
0:33:13.749,0:33:16.909
suppliers into the program so that they could
take care of beneficiaries.
0:33:16.909,0:33:22.839
I think in terms of the way that programs
are organized and structured and funded, however
0:33:22.839,0:33:27.209
they are structured, somebody is going to
look for vulnerabilities, and it has got to
0:33:27.209,0:33:31.179
be our job to stay ahead of them and to figure
out where the vulnerabilities are. No matter
0:33:31.179,0:33:35.769
how we organize and pay for health care, there
are going to be people, unfortunately, who
0:33:35.769,0:33:41.089
will try to steal from us, and they will look
at however the money is flowing and try to
0:33:41.089,0:33:45.759
figure out a way to go after that money. So
I think we need to be aware of all of these
0:33:45.759,0:33:49.399
incentives, the financial incentives, the
organizational structures, every aspect of
0:33:49.399,0:33:53.519
the program, but I think it is not unique
to any aspect of it.
0:33:53.519,0:34:00.029
[Mr. Davis] Attorney Lynch, let me ask you.
There used to be a time, and I guess there
0:34:00.029,0:34:07.029
still is, when there were what was called
Medicaid mills, where practitioners just kind
0:34:10.889,0:34:17.889
of had running streams of individuals coming
through their clinics, and they were just
0:34:19.440,0:34:25.710
seriously ripping off the public. Are we still
finding those?
0:34:25.710,0:34:31.039
[Ms. Lynch] I think we are seeing attempts
to recreate them. I think the benefits of
0:34:31.039,0:34:36.029
the Department's recent efforts have been
partnering with CMS and HHS, we have been
0:34:36.029,0:34:42.019
able to use techniques that get us quicker
data so that we can and we hope to intercept
0:34:42.019,0:34:47.799
these Medicaid and Medicare mills as they
are operating and move in to shut them down
0:34:47.799,0:34:48.159
quickly.
0:34:48.159,0:34:52.789
The problem of course is, as Dr. Budetti has
intimated, is these organizations will spring
0:34:52.789,0:34:58.450
up, close, and then reemerge under a different
name. So with the increased tracking that
0:34:58.450,0:35:03.109
we have been able to utilize with our partners,
we think we are doing much better at finding
0:35:03.109,0:35:06.869
these clinics and finding these doctors. But
it is still a continual problem.
0:35:06.869,0:35:13.869
[Mr. Davis] Quickly, Mr. Roy. Could you think
of some recommendations, based upon your experiences,
0:35:15.690,0:35:22.690
that might be helpful to implement as to further
reduce the opportunities for fraud and abuse?
0:35:23.490,0:35:26.230
[Mr. Roy] Yes, sir. Thank you for the question.
0:35:26.230,0:35:32.599
In my experience, and as I spoke to in my
testimony, for me personally it all comes
0:35:32.599,0:35:37.549
down to provider enrollment. It really comes
down to ensuring that those people that come
0:35:37.549,0:35:42.910
into our program are there to serve our Medicare
beneficiaries.
0:35:42.910,0:35:49.910
It seemed to be a theme throughout my tenure
at OIG that those who wish to perpetrate fraud
0:35:49.940,0:35:56.690
recognize the low barrier to entry, and they
exploit that to the maximum. So I would recommend
0:35:56.690,0:36:01.660
a concentration on a provider enrollment to
that aspect of the program.
0:36:01.660,0:36:04.269
[Mr. Davis] Thank you very much.
0:36:04.269,0:36:04.630
Thank you, Mr. Chairman.
0:36:04.630,0:36:05.619
[Mr. Gowdy] Thank you, Mr. Davis.
0:36:05.619,0:36:11.339
The chair would now recognize the gentleman
from Arizona, Dr. Gosar.
0:36:11.339,0:36:17.430
[Mr. Gosar] Mr. Roy, could you agree with
this description of fraud: Misusing a process
0:36:17.430,0:36:19.069
to gain a financial advantage?
0:36:19.069,0:36:21.049
[Mr. Roy] Yes, sir.
0:36:21.049,0:36:23.180
[Mr. Gosar] How about you, Ms. Lynch?
0:36:23.180,0:36:28.519
[Ms. Lynch] I think it is part of the description
of fraud. Obviously, when it comes to criminal
0:36:28.519,0:36:31.960
fraud, we would have to have intent requirements.
But, yes, that is part of the description
0:36:31.960,0:36:32.349
of fraud.
0:36:32.349,0:36:38.920
[Mr. Gosar] What if it was the government?
Would that still qualify? In a process. Let
0:36:38.920,0:36:45.329
me go a little deeper. How about that? How
do we audit our federally qualified health
0:36:45.329,0:36:50.450
centers? I am going to give you some personal
experiences just so you know.
0:36:50.450,0:36:57.450
I am a dentist. I have been practicing 25
years until last year. Why on the WIC program
0:36:57.460,0:37:04.460
would it take a single mom, most of the time,
five or six visits to see the doctor, repeated
0:37:04.859,0:37:11.829
entry, not on the same day? Why would we take
a child with a full mouthful of decay and
0:37:11.829,0:37:17.390
only allow one tooth be taken care of one
at a time? Can you describe why would we do
0:37:17.390,0:37:24.390
that? How about you, Doctor? You are talking
about processes. What kind of process would
0:37:24.470,0:37:25.410
mandate this kind of care?
0:37:25.410,0:37:29.329
Dr. Budetti. I am not familiar with those
policies, Dr. Gosar. But
0:37:29.329,0:37:31.289
[Mr. Gosar] Do you know what an encounter
is?
0:37:31.289,0:37:32.000
Dr. Budetti. Yes, sir.
0:37:32.000,0:37:33.700
[Mr. Gosar] Why would that be misused?
0:37:33.700,0:37:38.109
Dr. Budetti. I can understand your concern
if that is what you were observing.
0:37:38.109,0:37:44.039
[Mr. Gosar] I am alluding exactly to that.
Why would we what is the purpose of an encounter?
0:37:44.039,0:37:50.099
Dr. Budetti. The purpose of an encounter,
sir, of course, is to deal with the patient
0:37:50.099,0:37:52.589
and the issues the patient has and try to
take care of them.
0:37:52.589,0:37:57.500
[Mr. Gosar] How about we take five different
visits for a WIC woman to be able to fill
0:37:57.500,0:38:03.890
out a health history? And that took 5 weeks,
five different visits for an encounter. Would
0:38:03.890,0:38:04.890
you not call that fraud?
0:38:04.890,0:38:10.319
Dr. Budetti. I am not familiar with the situation
that you are describing, but that certainly
0:38:10.319,0:38:16.109
doesn't strike me as the best way to go about
the business of taking care of patients, sir.
0:38:16.109,0:38:22.829
[Mr. Gosar] When you look at processes, how
do we review the process when we look at FQACs?
0:38:22.829,0:38:26.869
You said that you are constantly are updating
and looking at processes. How do we look at
0:38:26.869,0:38:27.329
that process?
0:38:27.329,0:38:34.329
Dr. Budetti. In our area, sir, the work that
we are doing focuses principally on both Medicare
0:38:38.769,0:38:44.809
payments and Medicaid payments. And so we
look at the way that the money flows and look
0:38:44.809,0:38:51.809
for patterns of problems no matter where the
money is going. So we intend to look no matter
0:38:53.260,0:38:54.859
where the money is going.
0:38:54.859,0:39:01.710
I can't tell you that I am familiar with particular
emphasis on the kinds of issues that you are
0:39:01.710,0:39:05.859
talking about, but certainly we are looking
at all of the ways that the money is flowing
0:39:05.859,0:39:08.130
and the possibilities for problems like that.
0:39:08.130,0:39:11.829
[Mr. Gosar] What kind of audit do you on a
federally qualified health center, or health
0:39:11.829,0:39:16.819
center? And when are they done? Are they announced,
or are they unannounced?
0:39:16.819,0:39:20.710
Dr. Budetti. I would have to get you specific
information on that, sir. It is not something
0:39:20.710,0:39:22.799
that I am personally familiar with at this
point.
0:39:22.799,0:39:26.880
[Mr. Gosar] What if I was to tell you that
it is standing procedure that what we do is
0:39:26.880,0:39:30.569
we have standing patients that come in to
seek services on Medicaid and they are supposed
0:39:30.569,0:39:34.799
to be seen first come, first serve. And they
sit all day long, and they just get transferred
0:39:34.799,0:39:39.329
to a hospital. And they are isolated to one
segment of the day? Wouldn't you call that
0:39:39.329,0:39:46.329
fraud? It is a process. Right? An inappropriate
process. Right?
0:39:46.549,0:39:49.799
Dr. Budetti. It sounds like a process that
would need some attention to me, the way you
0:39:49.799,0:39:50.380
describe it, sir, yes.
0:39:50.380,0:39:53.690
[Mr. Gosar] Mr. Roy, you said that you look
and review these kind of processes. Would
0:39:53.690,0:39:55.339
this be something that you have looked into
before?
0:39:55.339,0:40:00.349
[Mr. Roy] Sir, the Office of Investigations
does not look into such processes.
0:40:00.349,0:40:03.569
[Mr. Gosar] How would you have to go back
into looking at them?
0:40:03.569,0:40:09.640
[Mr. Roy] I am an investigator. Our office
investigates fraud and brings those cases
0:40:09.640,0:40:14.920
to a criminal prosecutor either at the Federal
or State level. The audit process would be
0:40:14.920,0:40:16.509
from another component within our OIG.
0:40:16.509,0:40:18.269
[Mr. Gosar] And where would that come from?
0:40:18.269,0:40:21.019
[Mr. Roy] Our Office of Audit. And I am more
than happy to find out and get additional
0:40:21.019,0:40:23.329
information for you on that process.
0:40:23.329,0:40:27.569
[Mr. Gosar] Ms. Lynch, would we persecute
that individual who was the head of that health
0:40:27.569,0:40:29.710
center for that kind of misuse of patients?
0:40:29.710,0:40:33.109
[Ms. Lynch] Congressman, I hope we don't persecute
anyone.
0:40:33.109,0:40:36.059
[Mr. Gosar] I mean, prosecute. I am sorry.
It's been a long day.
0:40:36.059,0:40:38.509
[Ms. Lynch] Okay.
0:40:38.509,0:40:41.900
On the facts as you've described, I certainly
don't have enough information. It certainly
0:40:41.900,0:40:45.539
sounds like an inefficient process, but I
would have to know more about it.
0:40:45.539,0:40:51.690
[Mr. Gosar] If we had an administrator misusing
a process, fraud, that is misusing a process
0:40:51.690,0:40:57.319
for a financial aspect and an upward gain,
it seems to me like we have got to do a much
0:40:57.319,0:41:01.849
better job on that because we are seeing a
lot of this. It is not just the private sector.
0:41:01.849,0:41:03.950
It is also the government and the entities
that it pays.
0:41:03.950,0:41:04.950
I yield back my time.
0:41:04.950,0:41:09.920
[Mr. Gowdy] I thank the gentleman from Arizona.
0:41:09.920,0:41:15.140
The chair would now recognize the gentleman
from Maryland, the ranking member of the full
0:41:15.140,0:41:16.519
Oversight Committee, Mr. Cummings.
0:41:16.519,0:41:21.740
[Mr. Cummings] First, I want to thank the
witnesses for your testimony. And as I listened
0:41:21.740,0:41:26.289
to Mr. Gosar, I could not help but think about
the young boy in Maryland, Diamonte Driver,
0:41:26.289,0:41:33.289
who died 3 or 4 years ago because he could
not get a doctor, Medicaid doctor to treat
0:41:33.789,0:41:40.660
him; $80 worth of treatment would have saved
his life, and he eventually died, and his
0:41:40.660,0:41:44.380
mother was in search of somebody to treat
him.
0:41:44.380,0:41:48.049
And I guess as I listened to those questions,
I had to change my own line of questioning
0:41:48.049,0:41:53.430
because I want to make sure that we focus
where the fraud is.
0:41:53.430,0:42:00.430
Ms. Lynch, I am sorry. U.S. Attorney Lynch,
I really appreciate what you said when you
0:42:01.309,0:42:08.259
talked about in fiscal year 2010, the Department
secured approximately $2.5 billion in civil
0:42:08.259,0:42:13.059
health care fraud recoveries. And I think
before that, it had been, what? What was the
0:42:13.059,0:42:13.859
highest before that?
0:42:13.859,0:42:16.190
[Ms. Lynch] It was roughly around $1 billion
per year.
0:42:16.190,0:42:16.910
[Mr. Cummings] $1 million.
0:42:16.910,0:42:18.329
[Ms. Lynch] $1 billion, sir.
0:42:18.329,0:42:25.329
[Mr. Cummings] And I am trying to figure out
what I assume you believe first of all,
0:42:26.240,0:42:31.410
that is great. Congratulations to the Department,
to all the people who work so hard to accomplish
0:42:31.410,0:42:35.089
that. I assume you believe that there is more
to be done?
0:42:35.089,0:42:36.359
[Ms. Lynch] I do.
0:42:36.359,0:42:41.180
[Mr. Cummings] And what kind of tools do you
need to accomplish that? Because we on first
0:42:41.180,0:42:46.599
of all, on both sides of the aisle, we want
to see this fraud, waste, and abuse addressed,
0:42:46.599,0:42:53.119
and we want to see it addressed on every level.
And as you answer me, I just want to just
0:42:53.119,0:42:58.059
mention that the Coalition Against Insurance
Fraud estimates that 80 percent of health
0:42:58.059,0:43:05.059
care fraud is committed by providers and 10
percent by consumers. The remaining 10 percent
0:43:05.480,0:43:10.650
is thought to be committed by others, such
as insurance companies or their employees.
0:43:10.650,0:43:17.650
And so I am just wondering, what do you see
what can we do to address this issue in an
0:43:20.789,0:43:23.690
even more effective and pattern manner?
0:43:23.690,0:43:26.480
[Ms. Lynch] Thank you for the question, Mr.
Cummings.
0:43:26.480,0:43:30.390
I think that the President's budget outlines
several provisions that would increase the
0:43:30.390,0:43:36.190
resources being brought to bear on this problem
that would allow us to expand the strike force
0:43:36.190,0:43:40.930
system, for one, which would be an important
tool in targeting the transitory nature of
0:43:40.930,0:43:46.319
this fraud, the emerging nature of this fraud,
and the ever evolving nature of this fraud.
0:43:46.319,0:43:51.470
Another important initiative currently pending
on the Affordable Health Care Act actually
0:43:51.470,0:43:56.960
did mandate that the Sentencing Commission
put forth a schedule for higher sentences
0:43:56.960,0:44:02.309
for those individuals convicted of health
care fraud based upon the amount of false
0:44:02.309,0:44:06.400
billings, not just what they actually received.
Sometimes that is less than the amount actually
0:44:06.400,0:44:12.490
billed. But the Sentencing Commission was
directed to in fact revise the guidelines
0:44:12.490,0:44:17.180
to cover the amount billed as well as to raise
the guidelines for the type of fraud that
0:44:17.180,0:44:21.089
we are seeing. We think these are important
resources and tools that the Department would
0:44:21.089,0:44:23.490
use in fighting this battle.
0:44:23.490,0:44:29.980
[Mr. Cummings] Now, I assume that when you
spend a certain amount of money to go after
0:44:29.980,0:44:36.509
folks, there is a yield. In other words, there
is a benefit that comes back in the form of
0:44:36.509,0:44:42.700
prevention; hopefully, the message gets out,
but also in the form of dollars. And I was
0:44:42.700,0:44:48.440
just wondering, if the budget is cut substantially
say, for example, the strike force that you
0:44:48.440,0:44:53.809
talked about. We actually are kind of I mean,
if that is the situation where you can actually
0:44:53.809,0:45:00.809
show, I guess, where X dollars spent yields
X dollars, we are kind of I mean, if we in
0:45:02.269,0:45:06.630
the Congress slash your budget, I guess we
are kind of working against ourselves. Is
0:45:06.630,0:45:07.069
that right?
0:45:07.069,0:45:10.509
[Ms. Lynch] Well, I think we are certainly
working against the public fisc. I think it
0:45:10.509,0:45:15.750
has been documented, as I mentioned, over
the last 3 years, the HCFAC fund is returning
0:45:15.750,0:45:22.339
almost $7 back for every dollar spent. A lot
of that money has been allocated since 2008,
0:45:22.339,0:45:28.009
I believe. And so if we were to reduce or
eliminate certain funding streams, we would
0:45:28.009,0:45:31.069
severely curtail our efforts to go after this
fraud.
0:45:31.069,0:45:35.150
Of course, we would keep the focus up. We
would still work these cases. But we would
0:45:35.150,0:45:40.559
have fewer resources to do them, fewer people
with which to do these cases, and obviously,
0:45:40.559,0:45:44.660
I think the return to the American taxpayer
would be significantly diminished.
0:45:44.660,0:45:50.779
[Mr. Cummings] I think it was you, Mr. Roy,
who said that these folks who are involved
0:45:50.779,0:45:57.779
in this criminal activity a lot of times see
getting caught reminds me of drug dealers,
0:45:59.069,0:46:06.069
these big drug cartels. They see getting caught
as a part of the tax they pay. And so they
0:46:09.980,0:46:15.089
don't they are committed to accomplishing
this because they see the benefits are so
0:46:15.089,0:46:15.420
great.
0:46:15.420,0:46:18.029
[Mr. Roy] Absolutely, sir. Thank you for the
question.
0:46:18.029,0:46:23.059
The Eurasian organized crime element in Los
Angeles when I was a special agent in charge
0:46:23.059,0:46:27.740
out there and an assistant special agent in
charge, this criminal element had no fear
0:46:27.740,0:46:32.509
of law enforcement whatsoever. And indeed,
when they were caught and sentenced to jail,
0:46:32.509,0:46:37.339
they considered it a badge of honor. And in
fact what they would do is they would have
0:46:37.339,0:46:40.869
Mickey Mouse tattooed on their arms behind
bars to signify that they had done time in
0:46:40.869,0:46:42.089
a U.S. jail.
0:46:42.089,0:46:44.039
[Mr. Cummings] Thank you very much.
0:46:44.039,0:46:46.200
[Mr. Gowdy] Thank you, Mr. Cummings.
0:46:46.200,0:46:49.829
At this point, the chair would recognize the
gentleman from North Carolina, Mr. McHenry.
0:46:49.829,0:46:51.819
[Mr. McHenry] I thank the chairman.
0:46:51.819,0:46:54.890
And thank you for your testimony.
0:46:54.890,0:47:01.890
Mr. Roy, now, the incidents of fraud in different
types of Medicare programs are fall in different
0:47:06.059,0:47:07.900
rates. Is that correct?
0:47:07.900,0:47:09.309
[Mr. Roy] I would say so. Yes, sir.
0:47:09.309,0:47:16.309
[Mr. McHenry] For instance part D, Medicare
part D, is there a higher level of incidents
0:47:18.339,0:47:24.380
of fraud in that program compared to the rest of Medicare?
0:47:24.380,0:47:28.960
[Mr. Roy] Right now, we see the emphasis in
terms of fraud on durable medical equipment.
0:47:28.960,0:47:34.619
Certainly part D is up there. Home health
seems to be an area of Medicare where perpetrators
0:47:34.619,0:47:39.539
like to prey. And I also would go back to
corporate fraud element in terms of the tremendous
0:47:39.539,0:47:45.940
amount of dollars in the corporate culture
that goes along with that. I would say those
0:47:45.940,0:47:50.279
are some of the top areas of fraud. But I
think certainly part D falls within that realm.
0:47:50.279,0:47:56.470
[Mr. McHenry] Okay. Meaning you compare it
to A and B, for instance, what part of Medicare
0:47:56.470,0:48:01.259
actually has the highest incidence, according
to your study and research?
0:48:01.259,0:48:04.339
[Mr. Roy] Durable medical equipment right
now.
0:48:04.339,0:48:09.470
[Mr. McHenry] And where do those payments
come from? Which component of Medicare?
0:48:09.470,0:48:10.450
[Mr. Roy] They come from part B.
0:48:10.450,0:48:11.710
[Mr. McHenry] Part B.
0:48:11.710,0:48:13.900
[Mr. Roy] Yes, sir.
0:48:13.900,0:48:20.900
[Mr. McHenry] So comparing part B to part
D, which has the higher incidents of fraud?
0:48:21.609,0:48:24.680
[Mr. Roy] Clearly part B overall.
0:48:24.680,0:48:30.369
[Mr. McHenry] Now, is there something different
about the construct of those two programs?
0:48:30.369,0:48:37.369
Or is it, for instance, what they are paying
for? Is there something different about those
0:48:37.940,0:48:43.539
two that would leave a greater component of
taxpayers paying more for the program?
0:48:43.539,0:48:50.539
[Mr. Roy] I would say that one of the issues
on why part B would be higher than part D
0:48:50.569,0:48:56.539
is simply because part D is a newer program.
We are looking at the prescription drug benefit,
0:48:56.539,0:49:03.099
which is part D, is considerably newer than
part B, and the schemes haven't developed
0:49:03.099,0:49:06.210
yet as they have in our part B programs.
0:49:06.210,0:49:07.380
[Mr. McHenry] Interesting. Okay.
0:49:07.380,0:49:14.160
Ms. Taylor, is that similar to what your
findings or, your experience, I should say?
0:49:14.160,0:49:19.710
[Ms. Taylor] I think in the part D program,
we do find some issues there. But for the
0:49:19.710,0:49:25.720
most part, the errors that we identify are
mostly in the DME, the durable medical equipment
0:49:25.720,0:49:29.630
arena, which is the part B program.
0:49:29.630,0:49:36.630
[Mr. McHenry] Mr. Roy, is there something
intrinsic about the relationship between Medicare
0:49:37.170,0:49:43.160
and providers and patients, is there something
intrinsic in the construct of the program
0:49:43.160,0:49:45.579
that leads to greater incidents of fraud?
0:49:45.579,0:49:52.579
[Mr. Roy] That is an interesting question.
Not that I could put my finger on.
0:49:53.549,0:50:00.549
[Mr. McHenry] For instance, if you are writing
if Medicare is required to stroke a check
0:50:00.890,0:50:07.890
on a base amount of proof that a device has
been delivered or a service has been rendered,
0:50:08.049,0:50:10.809
you know, is there a way to change how that
is structured?
0:50:10.809,0:50:17.809
[Mr. Roy] Go back to what I said earlier about,
again, keeping a better eye on who we let
0:50:19.499,0:50:25.569
into our programs. We need to screen and scrutinize
our providers better. That is my opinion.
0:50:25.569,0:50:32.569
[Mr. McHenry] Okay. So private sector providers
of health care. Like compare CMS to one of
0:50:32.730,0:50:37.980
the Blues or one of the other health care
providers, do they have a similar level of
0:50:37.980,0:50:38.740
incidents of fraud?
0:50:38.740,0:50:45.089
[Mr. Roy] I am not familiar with what is happening
in the private sector. OIG for HHS, we concentrate
0:50:45.089,0:50:50.349
on Medicare. And clearly sometimes we will
be partnering with those entities, law enforcement
0:50:50.349,0:50:54.819
entities that have oversight and work in the
private sector health care fraud arena as
0:50:54.819,0:51:01.819
well. But there is nothing I am not the
person to say that those involved in Medicare
0:51:01.869,0:51:05.690
fraud are exponentially more than what we
see in the private sector.
0:51:05.690,0:51:12.690
[Mr. McHenry] Okay. Well, thank you, Mr. Chairman.
I would be happy to yield my time to the chairman
0:51:13.440,0:51:14.470
if you would like it.
0:51:14.470,0:51:18.230
[Mr. Gowdy] I thank the gentleman from North
Carolina. And I will keep that in mind.
0:51:18.230,0:51:24.069
I am going to go last. If there is anybody
here when I go, I will keep that in mind.
0:51:24.069,0:51:27.999
I would yield to at this point to the gentleman
from Connecticut, Mr. Murphy.
0:51:27.999,0:51:31.609
[Mr. Murphy] Thank you, Mr. Chairman.
0:51:31.609,0:51:37.299
Ms. Taylor, I just want to get a couple facts
on the table so we have a clear understanding
0:51:37.299,0:51:44.299
of the Medicaid program. Medicaid covers about
60 million atrisk Americans. Is that right?
0:51:44.859,0:51:51.859
[Ms. Taylor] I believe it is around 40 to
50, but it is in that ballpark.
0:51:53.029,0:51:59.180
[Mr. Murphy] And covers about half of all
of the longterm care expenses, half of all
0:51:59.180,0:52:00.680
the nursing expenses in the country?
0:52:00.680,0:52:02.930
[Ms. Taylor] Correct. Yes.
0:52:02.930,0:52:07.859
[Mr. Murphy] About a third of the money goes
into community services, and about half of
0:52:07.859,0:52:09.970
all Medicaid recipients are kids. Right?
0:52:09.970,0:52:16.970
[Ms. Taylor] I am not a Medicaid expert, but
I am not sure about that number, but I assume
0:52:17.970,0:52:21.579
it is probably a large chunk of children.
Yes.
0:52:21.579,0:52:27.900
[Mr. Murphy] I ask these questions because
what I see is a disconnect here today. This
0:52:27.900,0:52:29.779
is an incredibly important hearing.
0:52:29.779,0:52:35.279
But there is I think a gap between a very
worthy discussion that we are having here
0:52:35.279,0:52:41.319
today and what happened earlier today, where
my Republican friends outlined a proposal
0:52:41.319,0:52:47.539
to essentially end the Medicaid program as
we know it and dramatically cut Medicaid funds
0:52:47.539,0:52:54.539
for kids, for seniors in nursing homes, for
States, and essentially results in millions
0:52:56.380,0:53:02.150
of vulnerable seniors and children losing
access to our health care system. I think
0:53:02.150,0:53:07.130
this is a really important conversation. But
it happens on the same day that we are talking
0:53:07.130,0:53:12.069
about essentially ending preventative health
care services and crisis health care services
0:53:12.069,0:53:13.859
for a lot of vulnerable Americans.
0:53:13.859,0:53:19.009
And to Ranking Member Cummings' question,
there also seems to be a disconnect between
0:53:19.009,0:53:24.319
the budget debate that we are having today,
in which we are talking about potentially
0:53:24.319,0:53:29.130
dramatically cutting the budgets for many
of your agencies while asking you to do more
0:53:29.130,0:53:34.499
with respect to fraud and abuse. And in addition
to the bottom line numbers that are being
0:53:34.499,0:53:39.150
cut out of your budgets, there are also riders
to the continuing resolution, including the
0:53:39.150,0:53:45.049
repeal of the Health Care Reform Act. And
as we talked about, there are some incredibly
0:53:45.049,0:53:48.329
important provisions in that act which bolster
your efforts.
0:53:48.329,0:53:53.859
And so it is a frustrating hearing today,
because we are talking about radical changes
0:53:53.859,0:53:58.279
to Medicare and Medicaid being proposed today
that will withdraw services from millions
0:53:58.279,0:54:02.490
of vulnerable Americans. And we are talking
about cutting your budgets at the same time
0:54:02.490,0:54:07.999
that we are holding multiple hearings in the
Capitol about asking you to do more.
0:54:07.999,0:54:13.539
And I guess I take Representative Cummings
hit on a couple issues here, but I guess I
0:54:13.539,0:54:18.809
would pick one piece out of the Health Care
Reform Act that would go away with the continuing
0:54:18.809,0:54:23.230
resolution as passed originally through the
House of Representatives and pose the question
0:54:23.230,0:54:30.089
maybe to Mr. Roy and to Attorney Lynch. That
is, the element of the Health Care Reform
0:54:30.089,0:54:36.519
Act that focuses on data sharing, a really
important piece of understanding fraud and
0:54:36.519,0:54:42.220
trying to make sure that all agencies, whether
they be at the Federal or State level, have
0:54:42.220,0:54:49.220
the information that they need to try to track
fraud and to address it when necessary.
0:54:49.460,0:54:56.380
So I guess I would ask both Mr. Roy and to
Attorney Lynch, how important are the provisions
0:54:56.380,0:55:03.380
of the Affordable Care Act with respect to
increasing data sharing? And do you have worries,
0:55:03.869,0:55:09.940
should that act be repealed, whether you have
the resources necessary to try to track information
0:55:09.940,0:55:11.180
as it moves through the system?
0:55:11.180,0:55:15.739
[Ms. Lynch] Thank you, Mr. Murphy.
0:55:15.739,0:55:21.480
I would say that, yes, repeal of those particular
provisions would in effect harm our efforts
0:55:21.480,0:55:28.319
to eradicate fraud. In particular, data sharing
is important because as CMS and HHS are working
0:55:28.319,0:55:34.519
on their processes, they are able to provide
to us, the prosecutors, almost realtime data
0:55:34.519,0:55:39.799
on claims that are being made. And if we can
identify those fraudulent claims as they are
0:55:39.799,0:55:44.099
going into the system, we have a much greater
chance of stopping them before they get to
0:55:44.099,0:55:46.549
the large numbers that we are seeing currently.
0:55:46.549,0:55:51.400
We also have a much greater chance of identifying
the players. As I mentioned before, they do
0:55:51.400,0:55:57.180
tend to shut down and move on. This would
allow us to identify those players, those
0:55:57.180,0:55:58.900
fraudsters much earlier.
0:55:58.900,0:56:03.259
So, for us, for the Department, the Department's
perspective, the data sharing provisions of
0:56:03.259,0:56:06.119
the Affordable Care Act have been extremely
important.
0:56:06.119,0:56:07.769
[Mr. Murphy] Mr. Roy?
0:56:07.769,0:56:09.839
[Mr. Roy] Thank you, sir.
0:56:09.839,0:56:14.410
Ultimately, I think that I would probably
survive the data angle. Data and the way
0:56:14.410,0:56:19.539
you described the issues is very important
to investigators. I talk about it in my testimony
0:56:19.539,0:56:25.559
about how we are catching criminals in the
act as opposed to finding out 90 days later
0:56:25.559,0:56:28.799
that they are stealing money from us, and
by that time, they are already gone on their
0:56:28.799,0:56:31.690
way to the next scheme.
0:56:31.690,0:56:38.690
What concerns me more are the funding aspects,
the longterm funding for HCFAC. OIG, OI is
0:56:40.720,0:56:45.390
human resources driven, and I need to ensure
that I have the funding to keep bodies on
0:56:45.390,0:56:47.489
the ground and engaged in the process.
0:56:47.489,0:56:52.059
Other that than that, I think Dr. Budetti
and I I think I would be okay getting the
0:56:52.059,0:56:54.029
data out of Mr. Budetti.
0:56:54.029,0:56:56.450
[Mr. Murphy] Thank you, Mr. Chairman.
0:56:56.450,0:56:56.960
[Mr. Gowdy] I thank the gentleman.
0:56:56.960,0:56:59.989
The chair would now recognize the gentleman
from Indiana, Mr. Burton.
0:56:59.989,0:57:01.190
[Mr. Burton] Thank you, Mr. Chairman.
0:57:01.190,0:57:03.019
I just have a couple of questions.
0:57:03.019,0:57:10.019
Ms. Lynch, you said for every dollar that
is spent on prosecution, you get $7 back or
0:57:12.599,0:57:13.940
you recover $7?
0:57:13.940,0:57:17.029
[Ms. Lynch] Yes. Roughly, sir. Yes.
0:57:17.029,0:57:24.029
[Mr. Burton] The estimated fraud over the
last several years has been $150 billion each
0:57:25.019,0:57:32.019
year since 2008. I don't know how that dovetails
into the results you say you are getting.
0:57:33.589,0:57:37.799
If you're getting $7 back for every $1 invested,
then you are saying that you actually need
0:57:37.799,0:57:41.809
a lot more money in order to stop the fraud
that is so prevalent. Right?
0:57:41.809,0:57:47.660
[Ms. Lynch] Well, I think that certainly funding
is an important part of what we need. The
0:57:47.660,0:57:52.200
other tools that we have mentioned in terms
of and I would defer to the agencies, in terms
0:57:52.200,0:57:56.349
of changing their protocols, are also very
important as well. But the resources that
0:57:56.349,0:58:01.249
we have enable us to sharpen our focus on
these particular activities, and they do bring
0:58:01.249,0:58:02.329
great benefits back to the taxpayers.
0:58:02.329,0:58:09.329
[Mr. Burton] Well, the system that we have
right now just if you are getting $7 back
0:58:09.539,0:58:16.539
for every $1 that you get for investigations
or prosecutions, this is just overwhelming
0:58:17.059,0:58:21.829
you. There is just no way that you are going
to be able to really make a big dent in an
0:58:21.829,0:58:28.359
estimated $150 billion in fraud each year.
I mean, if you are doing such a good job,
0:58:28.359,0:58:35.359
which I don't disagree that you are, but if
you are getting $7 back for every $1 that
0:58:35.499,0:58:41.670
is being invested in you and we have got $150
billion in fraud each year, my gosh, you would
0:58:41.670,0:58:48.670
need $20 billion in order to keep up the 71
ratio if you went and got everybody.
0:58:49.380,0:58:54.549
So it just seems like to me it is almost an
insurmountable task that you have before you
0:58:54.549,0:59:00.339
to stop the waste, fraud, and abuse or even
make a big dent in it because it is so prevalent.
0:59:00.339,0:59:06.509
[Ms. Lynch] Well, Congressman, I would prefer
not to view any crime problem as insurmountable
0:59:06.509,0:59:11.170
but more as a challenge to be met. And I think
we have a number of tools. We have the civil
0:59:11.170,0:59:15.789
enforcement as well. We have a number of options
there. I would rather certainly rather not
0:59:15.789,0:59:16.809
give up on the problem.
0:59:16.809,0:59:19.480
[Mr. Burton] No. No. I don't want you to give
up. Don't misunderstand. I just think that
0:59:19.480,0:59:25.589
the whole system needs to be revamped, because
no matter how hard you work, all of you collectively,
0:59:25.589,0:59:31.230
to stop fraud, waste, and abuse in the system,
it is not going to work. I mean, when you
0:59:31.230,0:59:38.230
have got an estimated $70 billion to $234
billion in fraud, as hard as you work with
0:59:38.230,0:59:42.279
the money we give you, you are never going
to be able to make a big dent in it. The system
0:59:42.279,0:59:43.890
needs to be revised.
0:59:43.890,0:59:48.749
We need to do something like and this has
nothing to do with you. But it seems to me
0:59:48.749,0:59:53.519
that the government ought to provide a mechanism
for people to by insurance through private
0:59:53.519,0:59:58.910
sources rather than have the bureaucracy try
to contain waste, fraud, and abuse, because
0:59:58.910,1:00:04.390
you can't do it. As hard as you work and I
am sure you all work very hard. If you get
1:00:04.390,1:00:11.390
$7 back for every $1 in investment that you
make, and we still have $150 billion a year
1:00:12.239,1:00:17.160
in fraud, the system is not working. And it
is not going to get any better unless we take
1:00:17.160,1:00:22.700
a hard look at the system and revise the whole
thing. And I think that is what we are talking
1:00:22.700,1:00:23.710
about right now.
1:00:23.710,1:00:26.739
And I hope that both sides of the side of
the aisle, my colleagues on both side of the
1:00:26.739,1:00:32.019
aisle will take a hard look at that. Because
if we still have $150 billion in fraud that
1:00:32.019,1:00:37.359
we can't stop and we haven't been stopping,
and we have people who are working so diligently
1:00:37.359,1:00:42.339
like Ms. Lynch and the others, and they are
getting $7 back for every $1 we give them
1:00:42.339,1:00:47.529
for investigations, it is a task that is not
doable. And so we have to look at a different
1:00:47.529,1:00:52.660
way to deal with the problem of health care
and the system needs to be revised.
1:00:52.660,1:00:57.019
Obamacare I know you call it something else,
but we call it Obamacare. Obamacare is only
1:00:57.019,1:01:01.650
going to exacerbate the situation. So I think
we need to as a Congress go back and take
1:01:01.650,1:01:08.650
a look at the whole system and try to make
this system more responsive to the individual.
1:01:08.660,1:01:13.470
In other words, if they buy insurance from
a health care company and we provide a mechanism
1:01:13.470,1:01:17.480
for them to do that, we will be able to keep
track of the losses and whether or not there
1:01:17.480,1:01:20.839
is fraud, at least to a much greater degree
than we are right now.
1:01:20.839,1:01:22.839
[Mr. Cummings] Would the gentleman yield?
Just very quickly.
1:01:22.839,1:01:24.140
[Mr. Burton] Sure, I will be glad to yield.
1:01:24.140,1:01:27.329
[Mr. Cummings] Just very quickly. Just on
this side, we were trying to figure out where
1:01:27.329,1:01:31.950
you just give us the cite for your $150 billion,
since you
1:01:31.950,1:01:36.940
[Mr. Burton] Sure. The New England Health
Care Institute estimates that the U.S. wasted
1:01:36.940,1:01:43.680
$150 billion each year since 2008. But the
losses or the waste and fraud and abuse has
1:01:43.680,1:01:50.329
ranged from $70 billion to $234 billion. Even
if you take the lower figure, these people
1:01:50.329,1:01:54.109
who are doing a good job and I am not criticizing
them. I am just saying there is not enough
1:01:54.109,1:01:59.420
money that we can give them to enforce the
laws that will overcome at least $70 billion.
1:01:59.420,1:02:04.450
And the estimate is it is $150 billion a year.
And I thank the gentleman. I yield back.
1:02:04.450,1:02:04.700
RPTS DEAN DCMN SECKMAN
1:02:04.609,1:02:09.220
[Mr. Gowdy] I thank the gentleman from Indiana.
I will recognize myself now for 5 minutes.
1:02:09.220,1:02:14.289
Ms. Taylor, do agree with the President when
he said there is $900 billion of waste, fraud
1:02:14.289,1:02:15.710
and abuse in Medicare and Medicaid?
1:02:15.710,1:02:22.249
[Ms. Taylor] I think that is probably a better
question for Dr. Budetti.
1:02:22.249,1:02:25.039
[Mr. Gowdy] I mean yes or no?
1:02:25.039,1:02:26.619
[Ms. Taylor] I
1:02:26.619,1:02:29.950
[Mr. Gowdy] Is it a $900billionayear problem?
1:02:29.950,1:02:35.569
[Ms. Taylor] I am really not familiar with
that quote or that number. I am not familiar
1:02:35.569,1:02:36.069
at all.
1:02:36.069,1:02:42.999
[Mr. Gowdy] All right. Let me ask you, there
was a chart put up initially that had, we
1:02:42.999,1:02:49.999
want to go from pay and chase to verify. And
it strikes me the frustration that I have
1:02:50.319,1:02:54.599
heard listening to the testimony or frustration
that I have felt listening to it is that it
1:02:54.599,1:03:01.599
is the strategy seems to be pay and then pay
again to investigate and then pay again to
1:03:01.710,1:03:06.960
prosecute and then pay again to pretrial services
to do a PSI and then pay the probation and
1:03:06.960,1:03:11.019
pay to the marshals and pay to the Bureau
of Prisons. What I want to know is, when are
1:03:11.019,1:03:16.249
we going to invest the same amount of money
in stopping the fraud before it happens? We
1:03:16.249,1:03:20.309
cannot investigate and prosecute our way out
of this problem.
1:03:20.309,1:03:25.400
So Mr. Roy, let me ask you this, last night
I was reading and I could be wrong, let's
1:03:25.400,1:03:32.400
say I am, I counted 55 different recommendations
that have been made with respect to reforming
1:03:32.549,1:03:39.529
Medicare and Medicaid that have not been implemented,
55. Let's say I am off by 25, let's go down
1:03:39.529,1:03:46.099
to 25, or let's just take your issue, durable
medical equipment. Can you give us specific
1:03:46.099,1:03:51.769
things that should be done to start ferreting
out fraud, waste, abuse, whichever of the
1:03:51.769,1:03:56.220
three you want to call it, with respect to
durable medical equipment?
1:03:56.220,1:04:01.210
[Mr. Roy] I would go back to my earlier testimony,
sir, and concentrate on provider enrollment.
1:04:01.210,1:04:01.609
Scrutinizing
1:04:01.609,1:04:03.890
[Mr. Gowdy] Right, criminal background checks.
1:04:03.890,1:04:04.599
[Mr. Roy] Absolutely.
1:04:04.599,1:04:08.079
[Mr. Gowdy] What else? Make sure they are
familiar with the policies and procedures
1:04:08.079,1:04:09.170
so they can't claim they didn't know.
1:04:09.170,1:04:13.729
[Mr. Roy] Make sure they have office and office
hours. Make sure that they have products to
1:04:13.729,1:04:18.119
actually provide to durable medical equipment
beneficiaries.
1:04:18.119,1:04:19.319
[Mr. Gowdy] Okay.
1:04:19.319,1:04:23.859
[Mr. Roy] Again, I also would throw in there
that you have to look at the environment in
1:04:23.859,1:04:28.970
which they are working. In Los Angeles, for
example, we once had 25 durable medical equipment
1:04:28.970,1:04:33.079
companies in a 5mile radius serving a very,
very small
1:04:33.079,1:04:38.890
[Mr. Gowdy] All of which can be done with
a site visit, right? A criminal background
1:04:38.890,1:04:45.569
check, an interview and a site visit? It is
not high mass, so I would ask you Dr. Budetti
1:04:45.569,1:04:47.720
or Ms. Taylor, why hasn't that been done?
1:04:47.720,1:04:52.739
Dr. Budetti. Well, thank for the question
Chairman Gowdy, Chairman Gowdy, I must say
1:04:52.739,1:04:56.859
I agree with you that this is exactly what
needs to be done, and that is exactly what
1:04:56.859,1:05:03.859
we are doing. As of Friday of March 25th,
our major regulation took effect that put
1:05:04.900,1:05:10.749
into place riskbased screening for applications
to be new providers and suppliers.
1:05:10.749,1:05:12.690
[Mr. Gowdy] I don't want to interrupt you
1:05:12.690,1:05:15.160
Dr. Budetti. Putting those kind of screens
into place, sir.
1:05:15.160,1:05:17.539
[Mr. Gowdy] But can you appreciate the frustration
1:05:17.539,1:05:18.140
Dr. Budetti. Absolutely.
1:05:18.140,1:05:23.460
[Mr. Gowdy] of this problem not having arisen
in March of this year, it has been a problem
1:05:23.460,1:05:30.460
for a number of years. And I think folks question
what takes us so long to deal with that
1:05:31.229,1:05:36.900
is not high math what he just suggested. We
could come up with that over lunch. So what
1:05:36.900,1:05:38.150
has taken so long?
1:05:38.150,1:05:41.950
Dr. Budetti. I can't speak to what happened
before I took this job a year ago. But I can
1:05:41.950,1:05:46.089
tell you that those are some of the same reasons
I took the job. And those are exactly the
1:05:46.089,1:05:49.029
things that we are working on everyday.
1:05:49.029,1:05:55.839
[Mr. Gowdy] Mr. Roy, what about home health,
give me three things that you would do if
1:05:55.839,1:05:58.660
you were emperor for the day with respect
to home health?
1:05:58.660,1:06:03.739
[Mr. Roy] I would go back to, once again,
looking at those, who is coming into our program?
1:06:03.739,1:06:08.779
Who is providing those services? And then,
again, I would look at the environment to
1:06:08.779,1:06:13.390
see how many providers are in a certain area.
Does it really make sense to have an exponential
1:06:13.390,1:06:18.380
amount of providers to serve a community that
probably doesn't exist? Those are the types
1:06:18.380,1:06:21.710
of issues I would focus on if I was looking
at it from an administrative position.
1:06:21.710,1:06:28.539
[Mr. Gowdy] Dr. Budetti, do you agree with
me that Ms. Lynch and her colleagues cannot
1:06:28.539,1:06:32.309
ever prosecute and enforce our way out of
this problem?
1:06:32.309,1:06:36.809
Dr. Budetti. Yes, I think we all agree that
we need a teamwork approach here, that we
1:06:36.809,1:06:42.079
need to keep the bad guys out in the first
place, not pay them when they are submitting
1:06:42.079,1:06:47.150
fraudulent claims, and also go after the ones
who do get into the program and who do need
1:06:47.150,1:06:52.410
to be prosecuted. We can't do away with that
side of the equation by any stretch of the
1:06:52.410,1:06:52.660
imagination.
1:06:52.430,1:06:54.519
[Mr. Gowdy] I am not advocating that would
be one of the last things I would advocate
1:06:54.519,1:06:58.670
would be doing away with prosecutors. But
how are you going to change the payandchase
1:06:58.670,1:07:01.970
model to a verify and then pay?
1:07:01.970,1:07:07.119
Dr. Budetti. Through our new screening, through
our new authorities to declare a moratorium
1:07:07.119,1:07:11.299
on new enrollments of providers and suppliers
when necessary to fight fraud, through our
1:07:11.299,1:07:18.239
new ability to exclude to keep people out
of the Medicaid program. When they have been
1:07:18.239,1:07:22.529
terminated for cause in one State, they will
be terminated everywhere, same for Medicare.
1:07:22.529,1:07:27.170
We have a number of new authorities put into
effect that will have exactly that effect.
1:07:27.170,1:07:33.930
It is keeping the bad guys out and suspending
payments when there is a credible allegation
1:07:33.930,1:07:38.999
of fraud pending an investigation by our colleagues
at the Office of the Inspector General. All
1:07:38.999,1:07:39.910
of those are in place, sir.
1:07:39.910,1:07:43.900
[Mr. Gowdy] My time is up, so I am going to
ask one very quick question. Have those changes
1:07:43.900,1:07:46.880
already been implemented, or are they yet
to come?
1:07:46.880,1:07:52.720
Dr. Budetti. Many of them have the regulation
I referred to took effect, and we are actively
1:07:52.720,1:07:54.579
implementing it as I speak.
1:07:54.579,1:07:59.079
[Mr. Gowdy] And when would you expect the
country to have confidence that they are fully
1:07:59.079,1:07:59.569
implemented?
1:07:59.569,1:08:06.569
Dr. Budetti. I would expect that all of the
advanced technologies and other sophisticated
1:08:06.880,1:08:12.279
techniques that we are applying will be in
place later this year and will be well into
1:08:12.279,1:08:16.960
our payment systems fully integrated by next
year. But we are implementing them bit by
1:08:16.960,1:08:23.659
bit as we go forward, as we learn what we
can do in the meantime. But this is something
1:08:23.659,1:08:26.389
we are working on very diligently everyday
now, sir.
1:08:26.389,1:08:27.489
[Mr. Gowdy] All right, thank you.
1:08:27.489,1:08:34.489
Dr. Budetti. You are welcome, thank you.
1:08:43.589,1:08:48.150
I want to thank our panel, and we are going
to take a 5minute recess. I am going to come
1:08:48.150,1:08:52.509
down there and thank you all personally for
coming, and then we will set up for the next
1:08:52.509,1:08:52.759
panel.
1:08:52.679,1:08:52.929
[Recess.�